Reference no: EM133216401
Using Excel. Step by step
Complete two selected cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars: a) How many tickets must the ALLTEL Pavilion sell to break even? b) How many tickets must ALLTEL sell to earn $30,000 operating income after taxes, assuming a 40 percent tax rate?
3. What should be the average ticket price for the KFBS concert if the fixed-pay fee is $200,000 and the Pavilion expects to sell 7,000 tickets and wants to earn $30,000 after 40 percent in taxes?
4. Negotiating the fee for the KFBS Allstars: fixed-pay or per capita contracts?
a) What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilion wants to earn $45,000 after 40 percent tax and expects the show to have an average ticket price of $22.12? Assume the show is expected to draw 6,000 paying ticket holders.
b) What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilion wants to earn $45,000 after 40 percent tax and expects the show to have an average ticket price of $22.12? Assume, including 25 percent comp tickets, the show is expected to be a sell-out.
c) Independent of (a) and (b), what is the maximum per capita fee that the Pavilion can pay the KFBS Allstars, whose concert is expected to be a sellout, if the Pavilion wants to earn $180,000 after 40 percent tax from an average ticket price of $22.12 per ticket?
5. What role does CVP analysis and operating leverage play in contract negotiations with different types of performers (fixed-fee or per capita)?
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